Reading a physician employment contract.

What should the contract say about duties?

The duties clause sets the job: the specialty and services, clinic and hospital hours, call frequency, the locations where the physician will work, administrative and teaching duties, and whether the employer can change any of these. Vague wording such as duties as assigned lets the employer add locations or call later without a change in pay.

Ask for the expected schedule in writing: clinic sessions a week, call nights a month, which sites. If the employer wants flexibility, ask for a limit and for extra pay beyond it, such as a per-shift rate for call above the agreed amount.

How is a physician paid under the contract?

Contracts use fixed pay, variable pay, or a mix. Fixed pay is a set salary, common for physicians early in practice and often guaranteed for the first year or two. Variable pay rises and falls with a formula, most often based on work relative value units (a measure of the physician's clinical work), collections, visits or quality measures, and usually applies once the guarantee ends.

Read the formula with numbers in it. Ask what rate is paid per unit or what share of collections, whether the formula counts work the physician supervises, what happens if the employer's billing or scheduling holds production down, and whether any quality or citizenship bonus has measures the physician can actually influence. Compare the offer with pay data for the specialty and region before negotiating.

What about benefits, malpractice and tail coverage?

Benefits can add a great deal to the value of an offer: licensing fees and society dues, time off, continuing education money, retirement contributions, relocation and signing bonuses, and loan repayment. Read the strings attached, such as a bonus that must be repaid if the physician leaves within a set period.

Malpractice coverage deserves its own careful reading. Under a claims-made policy, coverage ends when the policy ends, so a claim filed after the physician leaves is covered only if someone buys tail coverage, an extended reporting endorsement that can be expensive. The contract should say who pays for tail coverage and whether that depends on who ends the employment and why. An occurrence policy, or an employer's promise to cover past claims, removes the question.

What do restrictive covenants and noncompetes do?

A noncompete bars the physician from practicing within a distance of the employer's sites for a period after leaving; a nonsolicitation clause bars them from approaching the employer's patients and staff. Together they can force a physician who leaves to move, or to stop practicing locally for a year or more.

Whether such a clause can be enforced is a question of state law, which differs from state to state. Negotiate the scope before signing: a shorter period, a smaller radius measured from the sites where the physician actually works, no restriction if the employer ends the contract without cause, and a buyout amount written into the contract.

How can the contract end?

Most contracts can be ended for cause, such as losing a license or privileges, and without cause by either side on notice. Check how much notice is required, whether the employer can pay the physician to leave immediately, whether the noncompete applies after a without-cause termination, and what happens to bonuses, tail coverage and patient notification.

Look for automatic renewal, how long the initial term runs, and whether the physician's pay can be changed at renewal. A contract that the employer can end on short notice but that binds the physician to a long noncompete is unbalanced, and worth negotiating.

Questions to ask

• Who pays for tail coverage, and does it depend on who ends the contract?
• Does the noncompete apply if the employer terminates without cause?
• What exactly does the productivity formula count, and at what rate?
• Which bonuses must be repaid, and under what conditions?
• Can the employer change the schedule, locations or call without new pay?

When should a physician get a contract review?

Before signing, every time. A health care attorney who practices in the state where the job is knows which clauses courts there will enforce and which terms are customary, and a review costs far less than a bad noncompete or an unpaid tail policy. The AMA recommends exactly that, and points to model contracts members can use to compare an offer.

Recruiters and employers on the other side benefit from a clear contract too: physicians who understand their terms stay longer. Recruiters pricing the cost of an open position can use the recruitment cost calculator.